When state’s rights drive up health care costs

Although I favor a single-payor approach, the most interesting exploration of self-purchased insurance solutions that I have seen suggests that community rating is a central aspect of making a self-purchased health insurance market affordable to persons with a personal history of illness. Community rating prevents an insurer from setting a higher premium for a new customer based on that customer’s prior history of health issues; it’s essentially the type of coverage all of us who work for large employers already have, and it is the opposite of how car insurance is priced.

Without community rating, if you have a history of health problems, perhaps a few breast biopsies without clear findings so far, insurance with decent coverage is likely to range from pricey to unaffordable no matter where you look..i.e. what company really WANTS your business?

A 3-part interview involving a conservative Republican member of the House Ways and Means Committee (Jim McCrery, LA) and a centrist Democrat (Jim McDermott, WA) was published in 2000 (October, the Atlantic Monthly). The 2 Representatives, coming from very different political perspectives, basically dreamed up what they thought was a politically palatable system to expand health care coverage, proceeding on the political understanding that neither a single-payer nor an unfettered free market were going to emerge any time soon.

The Republican argued that community rating was the obvious, least complex way to assure that persons with history of health problems had a viable place in the insurance market. Community rating can result in problems, however, particularly if the young healthy persons are not insured in the same system as those who have a history of illness (or if the young healthy people drop out). The writer explained that this happened in 1993 in the New York insurance market, where community rating was applied to the individual market (only), the few healthy individual insurance purchasers dropped out and it set off an insurance death spiral as plans became increasingly expensive for fewer and fewer sick people.

On that basis, Representatives McCrery and McDermott argued that a self-purchase system (tax breaks, subsidies for the poor) would have to require mandatory purchase of insurance by all….
McCrery argued for a system that actually put all comers in the same market, i.e. no employer-based purchases, no Medicare, no Medicaid…just everyone purchasing policies on the basis of community rating, and a requirement that they purchase.

It may seem radical for those of us who are used to either receiving care or offering care in protected sectors of the market, but it may be worth thinking about how everyone can be “protected” against being uninsured without a forced single-payer system.

The obvious downside is the same one that certain people invoke when complaining about McDonalds, et.al. ‘Uneducated’ or otherwise ‘incompetent’ people will end up with less than perfect insurance. If activists can complain about people getting fat because they eat fast food, you can bet they will see horrible problems with insurance which allows patients to ‘lose out’ on chiropractic care or massage therapy.

This proposal also doesn’t appear to address one of the biggest problems with non-group insurance now, the indiscriminate exclusion of care based on medical history. When I was applying for individual health insurance last year the biggest problem was not the cost, it was the exclusions. One company wanted to exclude all neurological problems that might occur in my 6 year old because she had fallen while running 4 years earlier and we had taken her to the ER. Everything was fine except a big knot on her forehead, but the exclusion would have gotten the insurance company out of all sorts of unrelated diagnoses like viral meningitis. I had had a pinched nerve in my low back successfully treated, but the insurance company wanted to exclude everything spine related including a traumatic cervical spinal injury. What good is catastrophic health insurance when the companies use every trick in the book to avoid actually insuring people?